Correlation Between Freightos Limited and Forward Air

Can any of the company-specific risk be diversified away by investing in both Freightos Limited and Forward Air at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Freightos Limited and Forward Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Freightos Limited Warrants and Forward Air, you can compare the effects of market volatilities on Freightos Limited and Forward Air and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Freightos Limited with a short position of Forward Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freightos Limited and Forward Air.

Diversification Opportunities for Freightos Limited and Forward Air

-0.45

Correlation Coefficient

Freightos Limited  Forward Air

Very good diversification

The 3 months correlation between Freightos and Forward is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Freightos Limited Warrants and Forward Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forward Air and Freightos Limited is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Freightos Limited Warrants are associated (or correlated) with Forward Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forward Air has no effect on the direction of Freightos Limited i.e., Freightos Limited and Forward Air go up and down completely randomly.

Pair Corralation between Freightos Limited and Forward Air

Assuming the 90 days horizon Freightos Limited Warrants is expected to generate 4.69 times more return on investment than Forward Air. However, Freightos Limited is 4.69 times more volatile than Forward Air. It trades about 0.26 of its potential returns per unit of risk. Forward Air is currently generating about -0.04 per unit of risk. If you would invest  6.51  in Freightos Limited Warrants on October 10, 2024 and sell it today you would earn a total of  10.49  from holding Freightos Limited Warrants or generate 161.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	54.1%
Values	Daily Returns

Freightos Limited Warrants  vs.  Forward Air

Freightos Limited

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freightos Limited Warrants are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Freightos Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Forward Air

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forward Air has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Freightos Limited and Forward Air

The main advantage of trading using opposite Freightos Limited and Forward Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freightos Limited position performs unexpectedly, Forward Air can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Forward Air will offset losses from the drop in Forward Air's long position.

The idea behind Freightos Limited Warrants and Forward Air pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.